Exhibit 10.19
SERVICES AGREEMENT
THIS SERVICES AGREEMENT dated as of the 25th day of January, 2003 by and
between DIRECT INSITE CORP., a Delaware corporation (hereinafter the "Company")
and James A. Cannavino, an individual residing at #1 Lovango Cay, USVI (mailing
address 6501 Red Hook Plaza, Suite 201- PMB, Red Hook, St. Thomas, USVI 00802),
(hereinafter referred to as "Cannavino").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Services Agreement with
Cannavino; and
WHEREAS, Cannavino desires to enter into a Services Agreement with the
Company;
NOW, THEREFORE, it is agreed as follows:
1. Prior Agreements Superseded. This Agreement supersedes any services,
consulting or other agreements, oral or written, entered into between Cannavino
and the Company prior to the date of this Agreement except for stock options and
restricted stock awards previously granted to Cannavino, which stock options and
restricted stock awards shall continue in full force and effect.
2. Services. The Company hereby agrees to employ Cannavino and Cannavino hereby
agrees to serve as Chief Executive Officer and Chairman of the Board of the
Company with commensurate responsibilities and to perform such services as
directed by the Board of Directors. Cannavino shall serve in similar capacities
of such of the subsidiary corporations of the Company as may be selected by the
Board of Directors without additional compensation. Notwithstanding the
foregoing, it is understood that the duties of Cannavino during the performance
of services shall not be inconsistent with his position and title as Chief
Executive Officer and Chairman of the Board of the Company.
3. Term. Subject to earlier termination on the terms and conditions hereinafter
provided, the term of this Services Agreement shall be for two years ending
January 24, 2005.
4. Compensation. For all services rendered by Cannavino under this Agreement,
compensation shall be paid to Cannavino as follows:
(a) During the first year of this Agreement, Cannavino shall receive 60,000
shares of the Company's common stock to offset Cannavino's requisite relocation
expenses plus 240,000 stock options. The shares of common stock shall vest
ratably on a monthly (5,000 shares) basis during the first year of this
Agreement with the first shares vesting on February 25th, 2002. During the term
of this Agreement, Cannavino shall receive $15,000 per month as compensation.
The 240,000 stock options shall vest 50% on the execution of this agreement and
the remaining in 50% shall vest ratably during months one through twenty-four of
the term of this Agreement. The stock options shall have an exercise price equal
to the closing price of the Company's common stock as indicated on NASDAQ on the
date of this agreement.
(b) During the period of this Agreement, Cannavino shall be eligible to
participate in the Company's stock option and stock purchase plans to the extent
determined in the discretion of the Board of Directors of the Company or
committee thereof.
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(c) Cannavino shall be entitled to participate in any short-term or
long-term incentive plan which the Company has in existence or which may be
adopted.
(d) During the period of this Agreement, Cannavino shall be furnished with
office space and secretarial service and facilities commensurate with his
position and adequate for the performance of his duties.
(e) Cannavino shall be entitled to fully participate in all benefit
programs available to executive employees of the Company throughout the term of
this Agreement.
5. Expenses. Cannavino shall be reimbursed for all out-of-pocket expenses,
including medical expenses, reasonably incurred by him in the performance of his
duties hereunder, including New York City office and housing, (Not to exceed
$10,000.00 per month for office and housing). Additionally Cannavino shall be
reimbursed for his reasonable expenses incurred performing his duties re: the
following not for profit organizations, (Marist College, National &
International Center for Missing and Exploited Children and "BENS" Business
Executives for National Security).
6. Severance Benefits. Cannavino shall be entitled to the severance benefits
provided for in subsection (c) hereof in the event of the termination of this
Agreement, by the Company without cause or in the event of a voluntary
termination of this service Agreement by Cannavino for good reason. In such
event, Cannavino shall have no duty to mitigate damages hereunder. Cannavino and
the Company acknowledge that the foregoing provisions of this paragraph 6 are
reasonable and are based upon the facts and circumstances of the parties at the
time of entering into this Agreement, and with this Agreement, and with due
regard to future expectations.
(a) The term "cause" shall mean:
(i) Cannavino's willful and continued failure to substantially perform his
duties under this Agreement (other than any such failure resulting from his
incapacity due to physical or mental illness) after demand for substantial
performance is delivered to Cannavino by the Board of Directors of the Company
which specifically identifies the manner in which the Board believes Cannavino
has not substantially performed his duties.
(ii) Cannavino's failure to refuse to follow directions from the Company's
Board of Directors provided that (a) Cannavino is provided written notice of
such directions and a reasonable period in which to comply and (b) Cannavino's
compliance with any such direction would not be illegal or unlawful.
(iii) Any act or fraud, embezzlement or theft committed by Cannavino
whether or not in connection with his duties or in the course of his performance
as defined in this Service Agreement, which substantially impairs his ability to
perform his duties hereunder.
(iv) Any willful disclosure by Cannavino of confidential information or
trade secrets of the Company or its affiliates.
For purposes of this paragraph, no act or failure to act on Cannavino's
part shall be considered "willful" unless done, or omitted to be done, by
Cannavino not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
Cannavino shall not be deemed to have been terminated for cause unless and until
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there shall have been delivered to him a copy of a notice of termination from
the Board of Directors of the Company after reasonable notice to Cannavino and
an opportunity for Cannavino with his counsel to be heard before the Board of
Directors of the Company finding that in the good faith opinion of such Board of
Directors Cannavino was guilty of the conduct set forth in clauses (i), (ii),
(iii) or (iv) of this paragraph and specifying the particulars thereof in
detail.
(b) For these purposes, Cannavino shall have "good reason" to terminate
this Agreement if the Company removes Cannavino from the position of Chairman of
the Board at any time during the term of this Agreement.
(c) The severance benefits under this section in the event of termination
without cause or by Cannavino for "good reason" shall consist of the immediate
vesting of all outstanding shares of common stock and options.
7. Death. In the event of Cannavino's death during the term of this Agreement,
all shares and stock options issued hereunder shall immediately vest.
8. Non-Competition.
(a) Cannavino agrees that, during the term of this Agreement, he will not,
without the prior written approval of the Board of Directors of the Company,
directly or indirectly, through any other individual or entity, (i) become an
officer or employee of, or render any services [including consulting services]
to, any competitor of the Company, (ii) solicit, raid, entice or induce any
customer of the Company to cease purchasing goods or services from the Company
or to become a customer of any competitor of the Company, and Cannavino will not
approach any customer for any such purpose or authorize the taking of any such
actions by any other individual or entity, or (iii) solicit, raid, entice or
induce any employee of the Company, and Cannavino will not approach any such
employee for any such purpose or authorize the taking of any such action by any
other individual or entity. However, nothing contained in this paragraph 8 shall
be construed as preventing Cannavino from investing his assets in such form or
manner as will not require him to become an officer or employee of, or render
any services (including consulting services) to, any competitor of the Company.
(b) During the term hereof and at all times thereafter, Cannavino shall not
disclose to any person, firm or corporation other than the Company any trade
secrets, trade information, techniques or other confidential information of the
business of the Company, its methods of doing business or information concerning
its customers learned or acquired by Cannavino during Cannavino's relationship
with the Company and shall not engage in any unfair trade practices with respect
to the Company.
9. Enforcement.
(a) The necessity for protection of the Company and its subsidiaries
against Cannavino's competition, as well as the nature and scope of such
protection, has been carefully considered by the parties hereto in light of the
uniqueness of Cannavino's talent and his importance to the Company. Accordingly,
Cannavino agrees that, in addition to any other relief to which the Company may
be entitled, the Company shall be entitled to seek and obtain injunctive relief
(without the requirement of any bond) for the purpose of restraining Cannavino
from any actual or threatened breach of the covenants contained in paragraph 8
of this Agreement.
(b) If for any reason a court determines that the restrictions under
paragraph 8 of this Agreement are not reasonable or that consideration therefore
in adequate, the parties expressly agree and covenant that such restrictions
shall be interpreted, modified or rewritten by such court to include as much of
the duration and scope identified in paragraph 8 as will render the restrictions
valid and enforceable.
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10. Notices. Any notice to be given to the Company or Cannavino hereunder shall
be deemed given if delivered personally, telefaxed or mailed by certified or
registered mail, postage prepaid, to the other party hereto at the following
addresses:
To the Company: Direct Insite Corp.
80 Orville Drive
Bohemia, New York 11716
Copy to: David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Suite 225
Jericho, NY 11753
To Cannavino: James A. Cannavino
6501 Red Hook Plaza, Suite 201-PMB
Red Hook, St. Thomas, USVI 00802
Either party may change the address to which notice may be given hereunder by
giving notice to the other party as provided herein.
11. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns, and upon Cannavino, his
heirs, executors, administrators and legal representatives.
12. Entire Agreement. This Agreement constitutes the entire agreement between
the parties except as specifically otherwise indicated herein.
13. Governing Law. This Agreement shall be construed in accordance with the laws
of the State of New York.
14. Change of Control. In the event (a) the Company has been consolidated or
merged into or with any other corporation or all or substantially all of the
assets of the Company have been sold to another corporation, with or without the
consent of Employee, in his sole discretion; or (b) the Company undergoes a
Change of Control, as hereinafter defined below, without prior Board approval;
then Employee is entitled to the immediate vesting of all shares of common stock
issued hereunder.
A "Change of Control" of the Company, or in any person directly or indirectly
controlling the Company, shall mean:
(i) a change of control as such term is presently defined in Regulation
240.12b-2 under the Securities Exchange Act of 1934 (the "Exchange Act");
(ii) if during the Term of this services agreement any "person" (as such
term is used in Section 13(d) and 14(d) of the Exchange Act) other than the
Company or any person who on the date of this Services Agreement is a director
or officer of the Company, becomes the "beneficial owner" (as defined in Rule
13(d)03 under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% of the voting power of the Company's then outstanding
securities; or
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(iii) if during the Term of this services agreement the individuals who at
the beginning of such period constitute the Board cease for any reason other
than death, disability or retirement to constitute at least a majority thereof."
15. Consent under Rights Agreement. The parties acknowledge that this Agreement
has been approved by the Company's Board of Directors and accordingly will not
result in the issuance of any rights under the Rights Agreement dated as of
August 28, 2001.
IN WITNESS WHEREOF, the parties hereto have executed this Services Agreement as
of the day and year first above written.
DIRECT INSITE CORP.
By: /s/
-----------------------------
George Aronson
Chief Financial Officer
/s/
- -------------------------------------
James A. Cannavino
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